The Chartered Institute of Personnel and Development (CIPD) has made it clear that it is against the UK government’s plans to increase the length of time people need to work for an employer before they can make a claim for unfair dismissal. This is after Chancellor of the Exchequer George Osborne revealed plans to increase the qualifying period for entitlement to employment protection rights against unfair dismissal from one year to two, with the aim of increasing the number of young people being hired by employers.

If implemented, employers will be able to dismiss employees who are unsatisfactory for misconduct reasons, poor performing employees, those who are physically or mentally incapable of doing their job (although they could still make disability discrimination claims because they have no qualifying period), or employees who are potentially redundant, without fair dismissal processes, provided those employees have less than two years’ service. The UK coalition government hopes that this proposal will give a boost to the private sector by allowing businesses more flexibility when recruiting and/or letting under-performing staff go without the fear of receiving Employment Tribunal claims for unfair dismissal.

In connection with this, Business Secretary Vince Cable said: “The priority of this government is to increase growth in our economy. We have one of the most flexible workforces in the world but there is more we can do to give British business the confidence it needs to create more jobs and support the wider economy to grow.”

In addition to this, the government also plans to charge up to £250 for an application to an employment tribunal and a further £1,000 to initiate a hearing. It estimates that such changes could save nearly £6 million a year for British business after they come into force on 6 April 2012.

However, CIPD chief economic advisor Dr John Philpott believes that the economic benefits of the move are questionable, because although reducing employment rights could encourage hiring, they will also make it easier to dismiss staff, leading to a more unstable labour market. As such, he argued: “While watering down unfair dismissal rights is seen as a way to boost recruitment and improve job prospects for young people and the long-term unemployed, the short-term impact will be limited by the overall weak state of the labour market, while in the long-term any positive effect on hiring is likely to be offset by a corresponding increase in the rate of dismissals.

“The vast weight of evidence on the effects of employment protection legislation suggests that while less job protection encourages increased hiring during economic recoveries, it also results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle, with little significant impact one way or the other on structural rates of employment or unemployment.”

Dr Philpott claimed that increasing the qualifying period for obtaining unfair dismissal rights risks reinforcing a hire-and-fire culture in UK workplaces which, he argues, would be detrimental to fostering a culture of genuine engagement and trust between employers and their staff and potentially harmful to the long-run performance of the UK economy. In fact, he strongly believes that this change in policy is not the way to boost growth and jobs.

TUC general secretary Brendan Barber believes – like Dr Philpott – that making it easier to sack people without any reason is simply a charter for bad bosses. He said that the proposed changes to the unfair dismissal rules will do nothing to boost growth and will not create a single extra job. He went on to say that that if the Chancellor was serious about jobs, he would be announcing new investment in infrastructure and help for the young unemployed.

Dr Philpott expressed his doubts over the government’s claim that the combined proposals will see the number of unfair dismissal claims fall by about 2,000 a year: He said it was unlikely that raising the threshold from one to two years will have the intended effect of reducing the number of employment tribunal claims, because employees are increasingly bringing claims linking unfair dismissal with discrimination claims that can be made from day one of employment.

“Office for National Statistics figures suggest that, as a result of the change, an extra 12 per cent of employees would potentially be denied the chance to claim unfair dismissal due to length of service – hardly likely to make much of a dent in overall tribunal numbers, given that only a small proportion of these would make any claim,” he said.

Angele Camilleri is a researcher at the Foundation for Human Resources Development (FHRD)